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11 MARCH, 2020
Today, there is steep rise in the number of people opting for personal loans in India. Personal loans are a type of unsecured loans and are generated for people who wish to fund their personal needs. It can be used to finance any need including paying medical bills, funding a wedding, serving the expenses of a vacation or just about anything. It is important to consider certain factors such as the interest rate, the processing fees, and the terms and conditions.
The high growth in personal loans can be explained by the different aspects and they include:
Quick processing – When in immediate need for funds, people usually turn to personal loans. They are processed at a much faster rate as compared to other kinds of loans. It is easily accessible and the documentation isn’t too elaborate. You do not have to gather too many documents making it a simple and faster process.
No collateral – A collateral is an asset that must be provided to the lender as a form of security when seeking a loan. In many emergency cases, it can be extremely difficult to produce a collateral. Personal loans are unsecured and thus, you do not have produce a collateral. However, the ability of the borrower to repay the loan is taken into account and you must meet the specified criteria.
Convenient repayment term – The repayment terms offered with personal loans are usually very flexible. Depending on the total loan amount, the term can run anywhere between one to five years. Usually, the payment must be fulfilled on a scheduled day of each month. This is a good benefit for people who wish to budget their expenses.
Debt consolidation - Personal loans can be used to finance any purpose and thus, it’s a suitable choice when consolidating debt. It can be used to pay off credit card debts or foreclose other kinds of high-interest loans. You can essentially pay off you debt in one EMI over keeping tab of several EMIs.
Offered online – You can apply for a personal loan online. Just like the tradition loan lending process, it requires minimal documentation and is an easy process. The amount is transferred directly into the bank account for convenient usage.
Personal loans are offered by a wide range of financial institutions, however, the features may differ. Ensure that you pick a suitable lender that fits all your needs. Additionally, you must be careful of your financial plan when seeking a personal loan. Getting a personal loan is a fairly easy process and this can trap you into utilizing the funds on expenses that are unnecessary. It can push you into a debt trap if not used wisely.
Additional Read:How to make the best use of personal loans!
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